July 24, 2009

As the Porsche World Turns...

The on-going saga of Porsche versus Volkswagen took a sharp turn with news that Porsche CEO Wendelin Wiedeking and his deputy Holger Haerter have agreed to resign their executive positions, and relinquish their seats on Porsche’s Board of Management, and on the Supervisory Boards of both Volkswagen and Audi.

Unless you’re better at reading German corporate tea leaves than I, it’s hard not to see this as a victory for Ferdinand Piech, the chairman of Volkswagen’s supervisory board. Piech, the grandson of Ferdinand Porsche who founded the eponymous company, is also a major stockholder in the family business.

Wiedeking took over the reins of Porsche in 1992, and steered it from near-bankruptcy into the world’s most profitable car company, based at least partly on the success of the controversial Cayenne SUV.

Last fall, Wiedeking attempted an audacious, even more controversial, hyper-aggressive and ultimately fatal tail-wags-dog takeover of the much larger Volkswagen group, in league with Piech’s cousin, Wolfgang Porsche.

But Piech neither enjoys being beaten at corporate strategy (or, frankly, anything else), nor has a great deal of experience at being so beaten.

The sticking point seems to have been whether Porsche would own VW and its many brands, or if Porsche will BECOME another of those brands.

Wiedeking's resignation clearly shows that the odds are now in favour of the latter.

Technically, the Porsche company owns just over half of VW’s shares, but has had trouble in today’s impossible capital markets raising sufficient funds to pay for them.

Porsche recently announced that they had acquired a huge loan from a Qatari financial institution, which now stands to end up with a chunk of Volkswagen.

But as I said a few weeks ago, stay tuned…

Oh, and cry no tears for Wiedeking. Here’s how him telling his wife the news might have gone:

“Liebchen, I have lost my job!”

“Oh no; how will we get by?”

“Oh, they had a parting gift for me. 50 million euros…”

Poor guy.

He says he’s going to give a big chunk of it to charity.

Wonder if he’s ever heard of the Canadian Automobile Journalists’ Benevolent Society?